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Sharp warns of profit loss in display business slide

The Japanese firm has warned that financial loss is on the horizon thanks to its smartphone display unit.

Sharp has warned shareholders of a six-month operating loss due to poor smartphone display sales.

On Monday, the Japanese firm said in a press release (.PDF) that investors should expect operating profits in the September to March 31, 2016 period to be in the red rather than rely on a former in-the-black forecast of a profit of 10 billion yen.

The electronics maker, due to report its first-half financial results this Friday, says that a sales decline and drop in market prices for liquid crystal display (LCD) panels used in smartphones is the culprit responsible for Sharp's latest profit drop.

According to the firm, "intensified competition" in the small and medium-sized LCD business will result in a forecast operating loss of 26 billion yen ($215 million).

Sharp has also pushed down its full-year profit forecast to 10 billion yen from a previous estimate of 80 billion yen.

The Japanese company has struggled in recent years thanks to stiff competition, the recession and currency fluctuations.

Once a successful display and electronics firm, Sharp has found it difficult to stay above water in the past, resulting in vicious job cuts, a three-year restructuring plan and the sale of units which were not turning a profit.

Sharp's restructuring, which included a business focus on LCD panels suitable for mobile devices, was meant to reflect changes in consumer purchasing patterns. Unfortunately, despite the explosion in mobile technology, the company is still fighting against stiff competition in the field.

In September, reports suggested electronics manufacturer Hon Hai, also known as Foxconn, was mulling over the potential purchase of Sharp's display business. If such a deal goes through, both Foxconn and another potential investor -- Apple -- could end up with operational control of the unit, which produces displays used in Apple products.

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